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Case Number

Civil Revision Application No. 619 of 1941

Advocates

J.C Shah, for the applicant.
C.K Shah, for the opponent.

Judges

Mr. Divatia, J.

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Smart Summary

Judgment Summary — Divatia, J.

Factual and Procedural Background

The petitioner obtained a decree against Jivanlal and in its execution attached certain lands of the judgment-debtor. The opponent (the claimant in the execution proceedings) applied under Order XXI, rule 58, Civil Procedure Code to raise the attachment. The executing Court dismissed that claim application with costs on the ground that the opponent was not in possession of the property at the time of attachment. The petitioner recovered those costs from the opponent.

The opponent then filed a regular suit under Order XXI, rule 63, seeking a declaration that the suit property was not liable to attachment and sale in execution of the petitioner's decree. On second appeal, this Court held that the opponent was entitled to a declaration that the suit property was not liable to be sold in execution. The opponent applied under Section 144 of the Civil Procedure Code for a refund of the costs recovered by the petitioner on the ground that the executing Court's order had been set aside by the decree in the regular suit.

The executing Court entertained the application under its inherent jurisdiction (Section 151) and directed refund, holding the earlier order of costs unjust and inequitable in view of the decree. The petitioner appealed to the District Court; the District Judge held the appeal not maintainable but nevertheless agreed that the order of costs had become inequitable and summarily dismissed the appeal. The petitioner sought revision in this Court against the original executing Court's order directing refund.

Legal Issues Presented

Whether a decree in a regular suit (filed under Order XXI, rule 63) that grants a declaration in favour of the claimant operates to set aside, not only the order allowing or disallowing the claim in the claim proceedings, but also the order of costs made by the executing Court in those claim proceedings.
Whether the executing Court has power under Section 144 or under its inherent jurisdiction (Section 151) of the Civil Procedure Code to direct refund of costs recovered pursuant to an order in the claim proceedings merely because a subsequent regular suit results in a declaration for the claimant.

Arguments of the Parties

Petitioner's Arguments

The executing Court had no power to direct a refund of costs either under Section 144 or under Section 151 of the Civil Procedure Code.
Even if the decree in the regular suit had the effect of setting aside the order in the summary (claim) proceedings, that effect would not extend to or necessarily affect the order of costs made in the claim proceedings.
The decree in the regular suit should not be treated as automatically vacating or reversing the costs order of the executing Court.

Opponent's (Claimant's) Position as Reflected in the Opinion

The opponent sought refund of the costs on the ground that the decree in the regular suit set aside the executing Court's earlier order, rendering the costs award unjust and entitling the opponent to repayment.
The opponent applied under Section 144; the executing Court entertained the matter under Section 151 and ordered refund on the basis that the decree made the costs order unjust and inequitable.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Phul Kumari v. Ghanshyam Misra	Shows that the effect of a decree in the plaintiff's favour in a suit under O. XXI, r. 63, would in substance be to set aside the order made by the executing Court.	Used to describe one line of authority that the decree in the regular suit can set aside the executing Court's order (as to allowance or disallowance of the claim).
Harishankar Jebhai v. Naran Karsan	Same proposition as Phul Kumari: the decree in a regular suit may, in substance, set aside the executing Court's order.	Grouped with Phul Kumari to indicate precedent supporting the proposition that the decree can nullify the executing Court's order on the claim itself.
Nambi Veettil Tarwad Tavazhi Karnavan v. Athikarath Valappil Tarwad Karnavan (Madras)	Holds that the decree in such a suit would not have the effect of setting aside the order of costs; the court passing the decree has no power to make or vary the costs order of the claim proceedings.	Quoted as the Madras High Court's view that costs of claim proceedings are not automatically affected by the decree; the present Court considered and rejected aspects of that view.
Chintaman Ramjipant v. Govind Vihtal (Nagpur)	Holds that a decree in the plaintiff's favour in the regular suit would also have the effect of setting aside the order of costs in the claim proceedings.	Presented as the Nagpur High Court's contrary view; the present Court explicitly disagreed with this position.
Raghu Nath Das v. Badri Prasad (Allahabad)	Holds that the executing Court becomes functus officio after passing its order, and if costs are recovered by the successful party, the executing Court has no power to direct a refund to a successful party in the subsequent regular suit.	Referred to as the Allahabad High Court's position (a middle stance); the present Court considered this authority in distinguishing available remedies.
V.E.R.M. Firm v. Maung Pa Kyone (Rangoon)	Holds that the Court trying the regular suit may have power to pass an order about costs in the claim proceedings if such relief is asked for in the suit; absent such relief, the order of costs is not automatically set aside.	Quoted as the Rangoon High Court's position (another middle view); the present Court relied on this reasoning to the extent it recognized the possibility of consequential relief but clarified limits on executing Court's power.

Court's Reasoning and Analysis

The Court proceeded by examining the nature of the proceedings under Order XXI, rules 58–63, and the distinction between the summary claim proceedings (based on possession at the time of attachment) and a regular suit (which may determine title or other rights).

The Court summarized the statutory framework:
- Under r.58 a claimant must adduce evidence under r.59 to show interest or possession at the date of attachment.
- Under r.60 the executing Court may release property from attachment if satisfied, inter alia, that it was not in possession of the judgment-debtor or was possessed by another.
- Under r.61 the Court shall disallow the claim if it finds the property was in possession of the judgment-debtor as his own at the time of attachment.
- Under r.63 the unsuccessful party in the claim proceedings may institute a suit to establish the right, but the executing Court's order is conclusive subject to the result of such suit.
The Court explained the core analytical distinction: the claim proceedings are essentially concerned with possession at the time of attachment, while a regular suit may determine title and may include consequential reliefs beyond mere declaration.
The Court addressed conflicting authorities:
- It recognized the Nagpur High Court view (Chintaman Ramjipant) that a decree in the regular suit sets aside the order of costs; the Court expressly rejected that view as inconsistent with rr.58–63.
- It considered the Madras view (Nambi Veettil...) that the suit court has no power to vary costs of claim proceedings; the Court also found that absolute — that the suit court never has power — to be incorrect because consequential reliefs (including relief as to costs) may properly be sought and granted in a suit.
- It noted the Allahabad and Rangoon positions as middle grounds: Allahabad treating executing Court as functus officio and Rangoon permitting relief as to costs only if sought in the suit.
The Court's central conclusion on the legal question:
- The setting aside by the decree of the first part of the executing Court's order (i.e., allowing/disallowing the claim) does not automatically set aside the second part of the order (the award of costs).
- Because the matters before the executing Court (possession) and the suit court (title, declaratory relief and consequential reliefs) are not necessarily identical, costs assessed in the claim proceedings are discretionary and not necessarily unjustified by a later decree.
- It is open to a party to seek consequential relief in the regular suit, which may include relief in respect of costs of the claim proceedings; where such relief is asked and granted, the suit court can affect the costs order. But absent such relief, costs do not get automatically vacated.
On the powers of the executing Court: the Court held that the executing Court does not have power under Section 144 or under its inherent jurisdiction (Section 151) simply to order a refund of costs recovered because the claimant subsequently obtains a declaration. The executing Court cannot, by its inherent jurisdiction, make amends to a party merely because he obtains a declaration in a subsequent suit.
Applying these principles to the facts, the Court concluded that the earlier order directing refund was not justified: the refund could not be ordered solely because the opponent obtained a declaration. Consequently, the order directing refund was set aside.

Holding and Implications

Holding: The Court set aside the executing Court's order directing refund of the costs and made the rule absolute, awarding costs in this Court and in the trial Court.

Implications and consequences:

The direct effect is that the order which had directed the petitioner to refund the costs recovered by him is quashed — the petitioner succeeds in revision and the earlier directive to refund is set aside.
The Court clarified the governing principle: a decree in a regular suit under Order XXI, rule 63, that declares the claimant's right does not automatically or necessarily vacate the executing Court's separate order as to costs in the claim proceedings.
The proper mechanism to obtain relief regarding costs of the claim proceedings is either to seek consequential relief in the regular suit (which the suit court can grant if asked and if appropriate) or to pursue such relief by appropriate proceedings; the executing Court does not have free-standing power under Section 144 or under Section 151 to order a refund merely because a subsequent declaratory decree is obtained.
By resolving the conflicting approaches of various High Courts, the decision rejects the categorical Nagpur view that costs are automatically set aside and limits the absolutist Madras position by recognizing that the suit court can grant consequential relief as to costs when properly claimed; nevertheless, the executing Court's power to order refunds under s.144 or s.151 is narrowly circumscribed.

Rule made absolute.

This summary is strictly drawn from the text of the opinion provided and does not add information beyond that opinion.

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Oza Ambalal Sankaleshwar v. Pandya Punjabhai Trikamlal

Divatia, J.:—

This is a revisional application against an order of the lower Court that the petitioner should refund the costs which he had recovered from the opponent in pursuance of an order made in certain claim proceedings under O. XXI, r. 58, of the Civil Procedure Code. The facts are shortly these:—The petitioner had obtained a decree against one Jivanlal and in execution he attached certain lands belonging to the judgment-debtor. The opponent applied for raising the attachment. The application was dismissed with costs on the ground that the opponent was not in possession of the property. Thereafter the petitioner recovered the costs of those proceedings from the opponent. The opponent then filed a suit under O. XXI, r. 63, for a declaration that the suit property was not liable to attachment and sale in execution of the petitioner's decree. The matter came to this Court in second appeal, and it was held that the opponent was entitled to a declaration that the suit property was not liable to be sold in execution of the decree. Thereafter the opponent applied under s. 144 of the Civil Procedure Code for refund of the costs which the petitioner had recovered from him on the ground that the executing Court's order was set aside by the decree in the regular suit with the result that the petitioner would not be entitled to the costs awarded to him. The Court held that even though the application was not strictly maintainable under s. 144, it could be entertained under the inherent jurisdiction of the Court under s. 151, and that the applicant would be entitled to refund because as a result of the decree in the regular suit the order of costs in the claim proceedings became unjust and inequitable so that the opponent was not entitled to keep the costs which he had recovered. An appeal was preferred against that decision to the District Court. The learned Judge held that the appeal was not maintainable and that in any case the order of costs became inequitable by the decree in the regular suit in favour of the opponent. The appeal was, therefore, summarily dismissed.

The petitioner has now applied in revision against the original order of the executing Court directing refund. It is contended on his behalf that the Court had no power to direct a refund either under s. 144 or s. 151 of the Civil Procedure Code inasmuch as the decree in the regular suit, even if it had the effect of setting aside the order in the summary proceedings, would not affect the order of costs, whatever it was, made in the claim proceedings. The point, therefore, is whether the order of costs made by the executing Court against the unsuccessful party in the claim proceedings should be regarded as having been set aside by the decree in the regular suit in favour of a party against whom the order was made. In order to appreciate this point it is necessary to see what is the nature of the order made in the claim proceedings and the nature of the decree made in the regular suit thereafter.

When a claim petition is made under r. 58 of O. XXI, the claimant or objector has to adduce evidence under r. 59 to show that at the date of the attachment he had some interest in, or was possessed of, the property attached. Under r. 60, if the Court was satisfied among other things that the property was not, when attached, in the possession of the judgment-debtor or of some person in trust for him, the Court shall make an order releasing the property from attachment wholly or partially. Then r. 61 provides that where the Court was satisfied that the property was, at the time when it was attached, in the possession of the judgment-debtor as his own property and not on account of any other person, or was in the possession of some other person in trust for him, the Court shall disallow the claim. Finally, under rule 63, where a claim or an objection was preferred, the party against whom an order was made may institute a suit to establish the right which he claimed to the property, but, subject to the result of such suit, if any, the order shall be conclusive.

It would thus appear that whenever a claim is preferred by a person under r. 58, the Court has to see in whose possession the property was, and what was the nature of that possession. If it is found that the property, when attached, was in the possession of the judgment-debtor as his own property or that it was not in the possession of the claimant, it would disallow the claim, and then the claimant will have to file a regular suit for a declaration to establish his right to the property. The suit need not be limited to such a declaration but may include all consequential reliefs which may flow from the declaration. It is held in Phul Kumari v. Ghanshyam Misra and Harishankar Jebhai v. Naran Karsan, that the effect of a decree passed in the plaintiff's favour in such a suit would in substance be to set aside the order made by the executing Court. The question is whether the decree granting a declaration in the plaintiff's favour would have the effect of not only setting aside the order allowing or disallowing the claim but also of setting aside the order of costs in the claim proceedings. There is a difference of opinion on this point. The Madras High Court has held in Nambi Veettil Tarwad Tavazhi Karnavan v. Athikarath Valappil Tarwad Karnavan that the decree in such a suit would not have the effect of setting aside the order of costs and that the Court passing the decree has no power of making or varying the order of costs of the claim proceedings as the decree in the suit simply declares or rejects the claim of the unsuccessful claimant. On the other hand, in Chintaman Ramjipant v. Govind Vihtal the Nagpur High Court has held that the decree in the plaintiff's favour in such a suit would also have the effect of setting aside the order of costs in the claim proceedings. What happened in that case was that the claimant's application was rejected with costs. He filed a regular suit for a declaration of his right to the property attached without seeking any further relief about costs of the claim proceedings. The suit was decreed in the plaintiff's favour, the order of costs being that each party should bear his own costs. The successful party in the claim proceedings had not executed the order of costs in his favour. After the decree in the suit he applied to execute that order, and it was held that the Court trying the suit, while directing each party to bear his own costs, could not have intended to keep alive the order of costs in the claim proceedings, because that order must be deemed to have been set aside wholly and not in part and the decree superseded the whole order of the executing Court. The Allahabad and the Rangoon High Courts have taken the middle position. According to the Allahabad High Court the executing Court becomes functus officio after passing its order, and if costs are recovered by the successful party, it has no power to direct a refund to the successful party in the regular suit: see Raghu Nath Das v. Badri Prasad. The Rangoon High Court has held in V.E.R.M Firm v. Maung Pa Kyone that the Court trying the regular suit would have the power to pass an order about costs in the claim proceedings if a relief to that effect was asked for by the plaintiff in that suit. But in absence of such relief the order of costs could not be said to have been automatically set aside by the decree in the regular suit. In that case the claimant's petition was dismissed and a suit was filed by him for a declaration of his rights and for the total costs incurred by him in the claim proceedings including the costs awarded against him by the executing Court. It was held that the Court, trying the suit, could award such total costs by way of damages as a result of his success in the suit, the effect of which was to set aside the order in the claim proceedings.

It cannot be said, in my opinion, that the order of costs made by the executing Court in the claim proceedings is automatically set aside if the party against whom it is made succeeds in the regular suit. In the claim proceedings it is the question of possession that has to be decided, while in the regular suit the unsuccessful claimant can ask for a declaration of his right to the property and also for other reliefs. It is indeed possible that a claimant may have a bad case in the claim proceedings and still a good case in a regular suit on title. In the claim proceedings the order consists of two parts, allowing or rejecting the claim and awarding or refusing costs. The setting aside of the first part of the order in the regular suit does not automatically set aside the second part. It would be open to the unsuccessful party to claim a declaration and consequential reliefs which may include the setting aside of the order of costs in the claim proceedings, but where no such relief is granted, the executing Court would have no power to change its order of costs, much less grant a refund where costs have been recovered. To hold that the older of costs is impliedly vacated if the suit succeeds would be tantamount to treating the suit as an appeal against the summary order. Such a suit, however, is not a direct appeal although it may have the effect of nullifying the order by allowing or disallowing the claim. The order is not reversed or set aside in the sense of its reversal by an appellate Court. In my opinion, therefore, the view taken by the Nagpur High Court is not in consonance with the provisions of rr. 58 to 63 of O. XXI. There would not necessarily be an anomaly if the order of costs in the claim proceedings stands in spite of the unsuccessful party succeeding in the suit. The order of costs is entirely in the discretion of the Court and the question before the executing Court is not necessarily the same as the question before the Court in the regular suit. It is conceivable that a party may not succeed on the question of possession in the claim proceedings and may still succeed in the regular suit for a declaration of his right to the property. It cannot, therefore, be said that the order of costs in the claim proceedings must always be regarded either as unjustified or impliedly reversed simply because of the success of the party in the regular suit. The Madras view that the Court hearing the suit has no power to change the order of costs is also, in my opinion not correct. It would be open to the party to claim a relief with regard to that order passed against him in the claim proceedings, and the Court can, in a proper case, grant it because it would be a consequential relief. But even assuming that it has no such power, the executing Court has no power under its inherent jurisdiction or under s. 144, Civil Procedure Code, to make amends to a party simply because he gets a declaration of his right to the property. The order is therefore, set aside, and the rule is made absolute with costs in this Court and in the trial Court.

Rule made absolute.

J.G.R

Oza Ambalal Sankaleshwar v. Pandya Punjabhai Trikamlal

Judgment Summary — Divatia, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Opponent's (Claimant's) Position as Reflected in the Opinion

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Oza Ambalal Sankaleshwar v. Pandya Punjabhai Trikamlal

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